Defra is working closely with the dairy industry to manage the impact of COVID-19. Demand for milk and some dairy products has increased in supermarkets and the vast majority of Britain’s dairy farmers continue to supply their contracts at the usual price. However, between 5 and 10 per cent of total milk production goes to the service trade, and these farmers have been impacted by the significantly reduced demand.
At the outset of the pandemic, the Government announced a number of emergency measures to support farmers, processors, and retailers. These include designating the food sector as critical to the response, with those working in the production, processing, sale, distribution or delivery of food categorised as “key workers” and granting derogations on drivers’ hours limitations.
In addition, to support milk producers, the Government announced on 17 April a temporary easing of some elements of competition law to make it easier for the dairy industry to come together to maximise production, processing and storage efficiency and ensure as much product as possible can be processed into high quality dairy products. This approach will allow the market for milk to adjust to the change in demand for milk while allowing production to be restored when shops, restaurants and pubs are able to open again. Exempted activities have been developed in conjunction with the dairy industry.
The Agriculture and Horticulture Development Board (AHDB) together with Dairy UK are launching a new £1 million campaign to drive consumption of milk and other dairy products. Running over 12 weeks, the campaign will highlight the role that milk and other dairy products play in supporting moments of personal connection during times of crisis. Defra and the devolved administrations are jointly contributing towards the financing of this campaign.
The dairy industry can access various Government backed loan schemes. The COVID-19 Business Interruption Loans scheme is available to farmers, milk buyers and milk processors. In addition, the new Bounce Back Loan scheme, which will apply to businesses including those operating in agriculture, will ensure that the smallest businesses can access up to £50,000 loans.
In recognition of the unprecedented challenges facing this sector, on 6 May 2020, Defra announced a new fund to help support those dairy farmers who have seen decreased demand due to the loss of the food service sector. The new fund will provide support for those most in need. Eligible dairy farmers in England will be entitled to up to £10,000 each, to cover 70% of their lost income during April and May to ensure they can continue to operate and sustain production capacity without impacts on animal welfare.
Public intervention for skimmed milk powder and butter continues to be available. Industry can sell skimmed milk powder and butter into public intervention when the price they would receive on the open market falls below the intervention price. This provides a floor price for dairy products. From 7 May, UK dairy processors are also eligible to apply for EU funded private storage aid in respect of skimmed milk powder, butter and cheese.